Chapter 03

Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Small Business Entrepreneurs

Characteristics and Competencies

What is an entrepreneur?

Is “entrepreneurship” innate? Or learned? Or both?

Are there certain personality characteristics? Or not?

Do entrepreneurs seek risk? Or are they risk-averse?

What descriptors would we assign to “entrepreneur?”

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Entrepreneurial Operational Competencies

Key business functions– activities common to all businesses – sales, operations, accounting, finance,

and human resources Industry-specific knowledge

– activities, skills, and knowledge, specific to businesses in an industry

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Entrepreneurial Operational Competencies

Resource competencies– the ability or skill of the entrepreneur at

finding expendable components necessary to the operation of the business

– Time, information, location, financing, raw materials, expertise

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Entrepreneurial Operational Competencies

Determination competencies– skill identified with the energy and focus

needed to bring a business into existence

Opportunity competencies– skills necessary to identify and exploit

elements of the business environment that can lead to a profitable and sustainable business

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Entrepreneurial Careers

Habitual – owns for a lifetime; more interested in personal satisfaction than income

Growth – also lifetime; major success (go public?)

Harvest – plan to exit Spiral – alternate growth and stability –

perhaps driven by family needs/issues Occasional – business is part-time

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Family Businesses

Family business– a firm in which one family owns a

majority stake and is involved in the daily management of the business

1/3 of the Standard & Poor’s 500 are family owned and managed

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Family Businesses

Family businesses make up over 1/2 of the businesses in the United States.

39% of businesses in the United States are small family businesses.

They employ 58% of America’s workforce.

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Family Business Challenges

Role conflict– the kind of problem that arises when

people have multiple responsibilities, such as parent and boss, and the different responsibilities make different demands on them

– Whenever possible, make decisions based on business necessities.

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Family Business Challenges

Succession– the process of intergenerational transfer

of a business– Lack of clear transition plan is the death

knell

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Entrepreneurial Teams

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Figure 3.3

Entrepreneurial Teams

Majority of new businesses have a team of two or more co-owners

Most teams are family related More than half of teams are spouses

or life partners working together

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Women and Minorities

Women-owned businesses are one of the fastest-growing sectors of all United States businesses

30% of all businesses are majority owned by women, with 18% equally owned by men and women

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Women and Minorities

Minority-owned businesses represent 11% of all United States businesses.

1992-1997 Growth rates– General Business 7% – Minority-owned 30%

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Women and Minorities

Discrimination in financing– Minority applicants were denied at twice

the rate of whites.– Asian and Hispanic owners pay higher

interest rates on their loans

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Second Career Entrepreneurs

Late career entrepreneurs– people who begin their businesses after

having retired or resigned from work in corporations at age 50 or older

• Sometimes called “grey” entrepreneurs

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